The administration's main concern in the Middle East is not Israel and the Palestinians but Iraq. Sharon will keep White House support as long as he contains the violence and prevents a spillover to neighboring countries that might threaten regional stability and thus harm American interests. But the Iraq and Palestine issues are linked. America's Arab allies have been telling Bush that Sharon, and not Saddam, is the biggest threat to the region -- arguing that the continuing Israeli-Palestinian conflict, which they blame on Sharon's intransigence, feeds radical discontent in their countries and thus poses a threat from below to their Washington-friendly regimes.

Sharon's biggest nightmare is a possible deal between Saudi Arabia and Washington, in which the Arabs would not oppose the removal of Saddam Hussein from power in Iraq, in return for a renewed Arab-Israeli peace process backed by Washington. This is the background of the Saudi peace initiative, the most talked-about development in Mideast diplomacy, which calls for a full normalization between the Arab states and Israel in return for full Israeli withdrawal from the occupied territories and Palestinian independence.

An Israeli source with good ties in Washington says that the president's father, former President George H.W. Bush, pushed the Saudis to come out with their peace initiative as a means to improve ties "between the families" of rulers in Washington and Riyadh. The Saudi royals needed to do something to defuse American pressure on them to reform their conservative and corrupt regime. But Bush junior has not jumped at the opportunity. He endorsed the Saudi initiative only after clearing it with Sharon, and after getting Saudi agreement that the Mitchell and Tenet plans must precede any grand vision of peacemaking.

But Sharon cannot rest assured that American and Saudi interests will not eventually merge at Israel's expense. Tensions between Israel and the U.S. flared briefly but bitterly last October, on the eve of the Afghanistan war. Angered by American pressure on Israel, which was part of an attempt to sign up Arab partners for the anti-terror war, Sharon accused America of "appeasing" the Arabs and of offering up Israel the way the European powers sacrificed Czechoslovakia to Hitler. The speech angered Bush, but Sharon apologized and the president let it pass. When the Afghan campaign moved ahead without Arab support, as the Pentagon had wanted it to, Sharon was relieved. But the possibility of renewed peace talks, with American backing, still haunts him. Such talks, by exposing the fault lines in Israeli politics, would likely split Sharon's shaky coalition and lead to the victory of the even more hard-line former Prime Minister Benjamin Netanyahu, who has vowed to wall off the Palestinians.

The next stage in American Mideast diplomacy is the Cheney trip, beginning Sunday. The vice president's itinerary includes eight Arab states, Turkey and Israel. His discussion points will include Iraq and the Saudi initiative. Jerusalem is on the trip's final leg, and Israeli leaders are eager to hear Cheney's conclusions on both issues. The vice president will not meet with Arafat or a representative of the Palestinian Authority.

Sharon has taken America's Iraq policy into his policy considerations. His aim was apparently to try to keep the conflict relatively low-key until American bombers hit Baghdad. By doing so, he would achieve two goals: He would assist the U.S. effort by avoiding further escalation, and give himself future strategic opportunities -- either to smash the Palestinians when the world's attention was fixed on Iraq, or to enjoy the better balance of power in a region without Saddam.

But the schedule was hastened by the Saudi initiative, which moved the focus from Iraq back to the Israeli-Palestinian arena. Moreover, the Palestinians succeeded in killing Israeli soldiers, and the situation escalated further last weekend, with Israeli forces operating in West Bank refugee camps, and 21 Israelis killed in the course of 24 hours. Sharon vowed to retaliate with severe military measures. However, he never lost sight of Washington: He told his Cabinet last Sunday that the operation would last only two weeks, thus concluding before Cheney arrives.

The U.S. is not the only constraint on Sharon. The right-wing prime minister needs to keep the Labor Party in his "national unity" coalition, and therefore has to restrain military actions and leave a crack for negotiations. Sharon's recent escalation moved his Labor partners, Foreign Minister Shimon Peres and Defense Minister Ben-Eliezer, closer than ever to leaving the government. Peres told an "inner Cabinet" session: "Had I imagined the way things are, I wouldn't have joined the coalition." To this he added harsh criticism of Sharon's policies of using only force to achieve quiet. The prime minister got the message, and backed off from his plan to redeploy Israeli tanks around Arafat's headquarters in Ramallah. On Wednesday, he invited Peres for a meeting and allowed him to call Arafat and discuss a cease-fire. A few hours before, Peres had told his confidants that he would remain in the Cabinet "as long as there is a chance for negotiations." Meanwhile, Ben-Eliezer worked hard to postpone a meeting of the Labor parliamentary caucus, meant to discuss leaving the coalition. The prevailing view in Israel is that Labor will eventually leave, but not yet.

The Israeli left is still disrupted from the peace process failure at Camp David, and has no clear agenda or leadership. The American "hands off" approach to the conflict has frustrated the left, which for many years has wished for an American intervention that would "save Israel from itself" by ending its occupation of the Palestinian territories. Yossi Sarid, the head of the Israeli opposition, reacted to the Powell speech by putting the responsibility for the recent escalation on Washington's hands: "Good morning, Colin Powell, suddenly you realized that Sharon's policy, with your encouragement, hurts both sides badly. If you only wanted, you could have stabilized the situation long ago."

Former Justice Minister Yossi Beilin of the Labor Party, Sarid's partner in the "peace coalition," lost his faith in American intervention long ago. And Peres, the elder statesman of the left, believes that the administration sees no basis for success, and is therefore refraining from repeating Clinton's mistakes. But Peres hopes that following Cheney's report on his Middle East trip, Washington will reassess the regional situation and might rethink its policy.

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